ABC Test, Dynamex and Court Reporting
Ever since I wrote my Herman Melville-length opus chronicling my year-long battle with the EDD, I have gotten many many MANY calls and emails from court reporting and interpreting agencies who face similar plights. Typically, they are dealing with an EDD intent on viewing their Independent Contractors as employees thus potentially triggering career-ending back payroll taxes.
Here 's the link to that post: http://www.toddolivas.com/blog/Court-reporter-found-to-be-Independent-Contractor-by-California-Appeals-Board-and-EDD-Audit.asp
Most recently, the questions have been about Dynamex v. Superior Court. For a good primer on this new case law, see this link: https://www.fisherphillips.com/resources-alerts-contractor-apocalypse-california-supreme-court-adopts-broad
Without belaboring the nuance about what the ABC test is, I am borrowing from the Fisher Phillips article this succinct definition:
In order for a worker to be considered an Independent Contractor all three of the following ABCs must be true:
A - The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
B - The worker performs work that is outside the usual course of the hiring entity’s business; and
C - The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
WHY DO I PASS THE ABC TEST?
In my opinion about the way I run Todd Olivas & Associates, all three prongs of the above ABC test are passed.
A - Our custom and practice (and our IC agreements clearly state) the reporter is not under our control or direction. See my EDD audit blog post about why I am 100% sure about this. Remember, you can't contract your way around labor law, so it only matters how you ACTUALLY treat the reporters using employer-like controls or not. I do not. Still, my written contracts now reiterate my custom and practice which is to exert zero employer controls.
B - The deposition reporters we use perform deposition services. Todd Olivas & Associates does not perform deposition services. (I am a licensed CSR but I do not do depos.) Todd Olivas & Associates merely matches freelance Independent Contractor reporters with attorneys who need that service. I refer again to my EDD audit blog post wherein the Administrative Law Judge wrote something profound about me:
'...The employer was simply a matching service for court reporters and did not employ any in-house court reporters.'
Our service is NOT performing court reporting duties -- in fact we never have -- but rather our service is simply MATCHING up court reporters with attorneys. I suppose if we had some staff reporters and some independent contractor reporters, that argument would be eroded. But we do not.
C - The court reporters we use have their own clients for whom they are free to perform court reporting and/or matching-making services all on their own.
OTHER KEY DIFFERENCES BETWEEN THE DYNAMEX FACTS AND THE COURT REPORTING INDUSTRY:
- Court reporting agencies benefit from a long-standing tradition of being run using Independent Contractors NOT employees.
- Court reporters are statutorily NOT employees under the Unemployment Insurance Code 630.
- Court reporting agencies are merely matching services according the Administrative Law judge in my EDD case.
- Court reporters are under Wage Order 11040. The Dynamex decision deals with drivers under the Wage Order No. 9.
- Wage Order 11040 lists Professional Exemptions under which court reporters are classified:
(3) Professional Exemption. A person employed in a professional capacity means any employee who meets all of the following requirements:
(a) Who is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or
(b) Who is primarily engaged in an occupation commonly recognized as a learned or artistic profession. For the purposes of this subsection, learned or artistic profession means an employee who is primarily engaged in the performance of:
(i) Work requiring knowledge of an advanced type in a field or science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes, or work that is an essential part of or necessarily incident to any of the above work; or
(ii) Work that is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the above work; and
(iii) Whose work is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical, or physical work) and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.
(c) Who customarily and regularly exercises discretion and independent judgment in the performance of duties set forth in subparagraphs (a) and (b).
(d) Who earns a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment. Full-time employment is defined in Labor Code Section 515 (c) as 40 hours per week.
From the above rationale, I believe my agency passes the ABC test. Thus the freelance court reporters we match with attorneys needing their services are rightfully categorized as Independent Contractors and not employees.
Wednesday, July 18, 2018